Sempra doesn’t regret gamble on natural gas

LNG plant in Texas may not even be built

Just as San Diego-based Sempra Energy brings two expensive liquefied natural gas importation plants on line, energy prices have fallen because of lowered demand and increased supply.

That has meant that a third LNG plant the company has proposed in Texas is on hold — and may be sold.

Natural gas is used for cooking, heating, electricity production and chemical manufacturing. The United States is the No. 1 user in the world. A few years ago, it appeared that supplies here were dwindling.

Sempra’s response was to get into LNG — ordinary natural gas that has been cooled to 260 degrees below zero and takes up 600 times less space than at room temperature.

It then can be shipped in specially built ships to terminals like Sempra’s $1.2 billion Energía Costa Azul about 13 miles north of Ensenada, where it is warmed and put into pipelines.

That plant began commercial operations in 2008 but took its first regular shipment late last year.

Sempra’s second LNG plant in Louisiana began service in 2009.

The prospect of shipping LNG here meant bringing worldwide competition into what has so far been a regional market.

Gas is priced, in large part, on where in the world it is bought and sold. Compare that to oil, which competes in a world market. LNG allows supplies to follow the market.

So when U.S. prices were high, and supplies low, LNG looked like a big moneymaker.

But then two things happened. First, a new way of extracting natural gas using high-pressure gas, chemicals and sand pumped into underground shale formations increased production substantially.

Then demand fell significantly with the Great Recession.

That drove prices for a million British thermal units — a measure of the energy content in natural gas — down from nearly $9, on average, in 2008, to around $5.50 today.

For the foreseeable future, the United States will be flush with natural gas supplies, said David Victor, an energy expert at the University of California San Diego.

“All that greatly reduces the need for imports in comparison with standard projections made even just a few years ago,” he said.

With natural gas plentiful and cheap in North America, Sempra’s plants are not operating anywhere near capacity.